Are per diems about to get less generous?

Jan. 6, 2013 - 03:00PM
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Acting GSA Administrator Dan Tangherlini (Treasury Department)

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The General Services Administration last year sought and failed to adopt a new methodology for calculating per diem rates that some industry experts said would have lowered per diems by up to 30 percent.

Now, GSA appears to be taking a second stab at recalculating per diems.

In the next month or two, GSA will assemble an advisory panel to review how travel reimbursements are calculated. The 15-member Government-wide Travel Advisory Committee will be made up of federal travel managers, representatives of state and local governments, and travel industry officials.

“I think it’s a way to involve the industry so that if the determination is made to cut per diem rates, it will have had industry input,” said Rick Singer, executive director of the Society of Government Travel Professionals.

When it tried to recalculate per diems last year, GSA hit stiff industry resistance and opted instead to freeze per diem rates in fiscal 2013 at 2012 levels — saving agencies an estimated $20 million, according to GSA. GSA said the freeze was needed to give the agency time to conduct a comprehensive review of the methodology used to determine per diem rates.

The effort to lower travel costs stems from a widely reported April 2 inspector general’s report that detailed lavish spending at an $823,000 GSA conference in Las Vegas in 2010, as well as intense pressure from lawmakers to pare federal travel spending.

Industry executives, like Erik Hansen, director of domestic policy at the U.S. Travel Association, say they hope the diverse makeup of the panel will enable it to examine government travel costs more broadly rather than on the narrow topic of per diems.

“We know that is not the only way to save money,” Hansen said.

GSA said in its announcement in the Dec. 27 Federal Register that the panel will examine current travel trends and provide recommendations on how to reduce costs and incorporate industry best practices.

Hansen said that the U.S. Travel Association has been pushing for the formation of a committee that will look at ways to lower government travel spending without lowering per diems. He said simple practices like encouraging travel on nonpeak days and using management systems that keep track of overall travel spending in real time can help.

“There is a real need to save money within the federal government, and the committee can help make that happen,” Hansen said.

Hansen said his organization is strongly opposed to lowering per diem rates.

Dan Tangherlini, GSA’s acting administrator, said in a statement to Federal Times that “through this committee, travel experts and stakeholders can meet and review existing travel policies, processes and procedures for the federal government, including the methodology by which annual adjustments are made to the federal per diem rate.“

The panel will have an initial two-year term and will automatically expire unless GSA renews it. Each member will be able to serve for one two-year term with the possibility of a one-year extension, according to the Federal Register notice.

Scott Lamb, director of the government segment for Hilton Worldwide, hailed GSA’s announcement of the new panel. “GSA is right on time with this advisory board,” Lamb said.

Agencies have already cut travel spending in fiscal 2012 by more than $600 million, according to government data.

Overall travel spending fell 6 percent — from about $9.6 billion in fiscal 2011 to nearly $9 billion in 2012 — according to data provided by the SmartPay charge card program, which has about 2.5 million cardholders across the government.

But travel spending will be cut even further — the Office of Management and Budget directed agencies to cut travel spending by 30 percent in 2013 compared with a 2010 baseline.

Goran Gligorovic, executive vice president at Omega World Travel Inc., said the broad scope and diversity of the panel will allow the committee to look for ways to cut costs other than cutting per diems.

He said the committee will be able to provide GSA and the rest of the government with industry best practices and recommendations on how to apply those practices governmentwide.

“The best practices may get accepted by the federal government — or not — but at least [they’re] on the table,” he said.

He said the committee will be able to balance per diem methodologies because they will understand how the pricing in varying areas is changing and how much it costs to rent a hotel room or eat a meal in areas across the country.

“Per diem rates need to be balanced with travel policy to allow federal travelers to complete their mission,” Gligorovic said.